# ‘The Winning Bid’

On March 3rd, 2020 The Associate Professor of Managerial Economics and Strategy of LSE, Dr Christine Thomas interviewed the Chief Executive Officer of Christie’s Guillaume Cerutti. This was hosted by the LSESU French Society.

A dive into personal life — Mr Guillame having an interest, an intuition rather, for civil services, pursued higher education at École Nationale d’administration. During his time the university was the renowned stepping stone into French civil services, it presented opportunities based on merit, to people with or without any background or connections.

After graduating he worked at Ministry of Finance and Economics, which is tasked with auditing institutions that propel France’s economy. A spark of wanting to distinguish himself in place of the ‘typical economics/finance’ his friends took, he strove to specialise in culture, for instance, auditing the French Opera House. He did express that “politics is a tough world”, persevering to become Chief of Staff for Ministry of Culture and Media. Consequently, he had developed a desire to work in the private sector and when Sotheby’s did present him an offer, he jumped aboard.

“When you try, looking for a change, it never comes when you plan for it. I got an offer from Sotheby’s two years later.”

The question then arose that if at present he was the age of 22 years what decisions would he have made with regards to his career? He answered, “I will go to London School of Economics.” He developed this with two key points:

1. A critical point is an international experience, not the prestige of the university but how quintessential it is to experience abroad.

2. A piece of advice he offers to his young specialists at Christie’s is: “It is good to specialise but you cannot be a monolith.” He supports the dogma of having a versatile interest and exposing oneself to a multitude of subjects and paths, to make a difference.

“Travel, multiply experience, be curious.”

The Constitution of Christie’s — There are established criteria that Christie’s adheres to, they believe that the owner is very special. Owners have an intrinsic relationship with the object. They must also “entrust” Christie’s with the object, being assured of the finest services being delivered to them. This entails having supreme specialists and expertise, the crucial knowledge base for the objects. Additionally, it must be noted the Christie’s is an auction house in the “imperfect duopoly market setting” encountering vociferous competition with rivals Sotheby’s. Here the key differentiator is not necessarily pricing, but there is paramount importance set on sustaining a relationship with the client.

## “Our main asset is our people”

Competition is also present in terms of bilateral poaching, trying to attain the best talent amongst the rivals, hence why the presence of non-compete clauses in this industry. Mr Cerutti himself had to wait a year after leaving Sotheby’s before marching ahead with Christie’s. Having seen and led both the auction houses, he describes the similarities from the client’s point of view. They are ‘neck-to-neck’ by market share and after Sotheby’s becoming a private entity in 2019, the organisational structure is very much alike between the two. The pressure is high. The CEO voiced that in order to achieve the same market results as the past, they required double the turnover from the past to match.

Sidenote from the author: While illustrating the intense competition between the two auction houses, Mr. Cerutti acknowledged the price-fixing incident between Sotheby’s and Christies in 2000.

Interestingly this was a major case study in the course I had studied, EC102, taught by the Professor of Economics of LSE, Ronny Razin. Kudos to LSE for being so wholesome.

Some Eclectic Thoughts — It is imperative to recognise that the art market has so many categories and sub-categories that while many do depend on economic performance, many don’t. Take contemporary art, it is most fragile and fluctuates in sync with the economic cycle, while antiquities are far more resilient. The later seems to be because real collectors tend to be the buyers of such art and they are committed to collecting regardless of the snapshots of the economy.

“Best managers talk the language of specialists.”

The CEO defined his greatest auction which took place just months after his joining, in November 2019 when Christie’s sold ‘Salvator Mundi’ by Leonardo Da Vinci for $450 million, it was a “very special moment”. Christie’s had committed to a minimum price for the painting to the client of$100 million, may seem a portion of the selling price, it was the highest ever guaranteed price by an auction house. The whole event was lauded and followed worldwide by 500,000 people through social media.

A key notion that was put forward is that there is a value and there is a price. The former is determined by history, the latter is reflected by the auction at a given time. It must be considered that being an owner of an object does not equate to owning commodity, the object is self-defining after all.

My Q&A question— “As first-year undergraduate studying mathematics and economics, in our course, we have encountered ways of non-price competition, now given that you have emphasized the relationship between Christie’s and its clients as a major factor, could you expand on this with an example of a situation which highlights this nuance?”

Do note that I had been repeatedly trying to get the attention until Professor Thomas noted my eagerness and ultimately yielded to me with “The boy in the black shirt”…

The Q&A answer— In delightful agreement, Mr Cerutti shared a story with us which ultimately was narrated to him by the legendary auctioneer Mr François Curiel.

There was once one of the biggest collectors of jewels, who sought advice from Christie’s, inquiring about the availability of an exclusive gemstone. Unfortunately, the gemstone was not available at Christie’s at that time. A few days later a jewel matching those specifications was available at Sotheby’s, thus the jewel specialist at Christie’s recommended that the collector seek Sotheby’s for his desired gem. This recommendation consolidated the confidence in the eyes of the collector as Christie’s catered to the client regardless of the fierce competition.

Now for me, this serves as a fine paradigm of how Christie’s remains committed to their clients, as well as insightful to see the extent Christie’s goes in retaining their steadfast relationships with their clients. This brought the sagacious evening to close from which I deduced that Mr Guillaume Cerutti, a leader of versatile discernment is a key dedicated driver in keeping Christie’s at the top, on an upward trendline.